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Vermont Medical Deduction

If you claim medical expenses on your federal individual income tax return, Vermont allows you a limited deduction for medical expenses on your Vermont income tax return.

The Vermont medical deduction became effective Jan. 1, 2019, beginning with tax year 2019. See 32 V.S.A. §5811(21)(C). The Vermont medical deduction is an amount equal to the itemized deduction for medical expenses on the federal return reduced by the following:

  • Vermont standard deduction

  • Vermont personal exemption(s) and

  • Any amounts deducted federally attributed to an entrance fee or monthly payments to a continuing care retirement community that exceed the deductibility limits. The deductibility limits are shown in the table below. A continuing care retirement community (CCRC) is one regulated by 8 V.S.A. C. 151. There is currently only one such CCRC in the State of Vermont.

For these fees or payments, the deductibility for Vermont is limited by an amount equal to the federal deductibility limits for qualified long-term care insurance contracts under 26 U.S.C. 213(d)(10)(A).

How to Calculate the Deduction

If you claim the medical deduction on federal Schedule A (Form 1040), Itemized Deductions, you are allowed to claim the Vermont medical deduction. Please see the medical deduction worksheet in the instructions for the Vermont IN-112.

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Medical Deduction Worksheet

1a. Begin with the amount you’ve calculated and entered for “Medical and Dental Expenses” on federal Schedule A.

1b. Subtract any amounts deducted federally that are attributed to payments of entrance fees or recurring monthly payments made to a continuing care retirement community that exceed the deductibility limits (see the table below) for premiums paid during the year for qualified long-term care insurance contracts.

Table: Deductibility Limits

For tax year 2022, continuing care retirement community fees or monthly payments deductible as a Vermont medical expense are limited to:

Limitation on Premiums Attained Age Before The Close of The Tax Year
$450 Age 40 or less
$850 Age 41 to 50
$1,690 Age 51 to 60
$4,510 Age 61 to 70
$5,6 Age 71 and over

The 2022 limitations are from IRS Publication 502. These limits are published annually.

1c. Subtract line 1b from line 1a.

2. Enter the amount from the IN-111, line 6, which is the total of your Vermont Standard Deduction and Personal Exemptions.  

3. Subtract line 2 from line 1c. If the amount is negative, Stop, you do not qualify for the deduction. If the amount is positive, enter it on the IN-112, Part 1, line 11.  

Example 1

For tax year 2022, a married couple with no children itemizes their deductions on their federal income tax return and claims $50,000 in medical expenses. Their deductible amount for medical expenses for the Vermont income tax deduction will be $28,800. 

Federal deductible medical expenses $50,000
Subtract $12,500 (Vermont standard deduction)  -$12,500
Subtract $8,700 (two Vermont personal exemptions) -$8,700
Deductible Vermont medical expenses equals $28,800

Enter $28,800 on Vermont Form IN-112 on the line for the “Medical Expense Deduction.”

Example 2

For tax year 2022, a married couple ages 65 and 66 (with no children) itemizes their deductions on their federal income tax return and claims $50,000 in medical expenses, ($20,000 of which was for an entrance fee or monthly payments made to a continuing care retirement community). Their deductible amount for medical expenses for the Vermont income tax deduction will be $15,720.

Federal deductible medical expenses $50,000
Subtract $14,600 (Vermont standard deduction for two seniors) -$14,600
Subtract $8,700 (two Vermont personal exemptions) -$8,700
Only $4,510 x 2 = $9,020 is allowed at the Vermont level for monthly payments or entrance fees to a CCRC so the overage needs to be subtracted. -10,980
Deductible Vermont medical expenses equals $15,720

Enter $15,720 on Vermont Form IN-112 on the line for the “Medical Expense Deduction.”